Moody's considers it “unlikely” that France will meet its deficit discount goal by 2027 | EUROtoday

The score company Moody's judged, Wednesday March 27, “unlikely” that France maintains its goal of decreasing the general public deficit to 2.7% by 2027, ” such [que le gouvernement] provides for this in its medium-term budget plan presented in September”. Moody's also estimated, in a press release, the 10 billion additional savings in 2024 insufficient to “get the government back on track” planned budget.

The public deficit for 2023 ultimately amounted to 5.5% of gross domestic product (GDP), or 154 billion euros, according to data published Tuesday by INSEE, responsible in France for measuring it. A figure much higher than the 4.9% recorded by Bercy in the finance law for 2024, adopted at the end of the year.

Moody's, whose schedule provides for an update of the French rating on April 26, clarified that the opinion published Wednesday was not a rating opinion strictly speaking.

“Revenues lower than expected”

The Minister of the Economy, Bruno Le Maire, nevertheless reaffirmed on Tuesday his “total determination” to return below the 3% public deficit in 2027.

“The larger-than-expected deficit is almost entirely due to lower-than-expected revenue”, added Moody's in its press release. This higher deficit “underlines the risks inherent in the government's medium-term budgetary strategy, which is based on optimistic economic assumptions and revenues, as well as unprecedented cuts in spending”explained the rating agency.

Moody's also estimated “unlikely” that the government maintains its objective of a deficit of 4.4% this year despite the additional cuts announced. Reduce the deficit by one percentage point in one year, excluding exceptional circumstances linked to Covid, “has only been done once since 2000”recalled the agency.

In addition, the rating agency said it expected the level of French public debt to rise again ” slowly ” from 2024, exposing the country to interest-related costs “never seen in more than twenty years”.